Options for Regional Economic Communities

The system for compulsory licensing for export of TRIPS article 31bis (previously known as the August 30 waiver or Paragraph 6 mechanism) created some interesting options for Regional Economic Communities (REC) that have a majority of least developed country members. According to TRIPS 31bis (3), they can bundle demand and place orders for the supply of the entire region whether developing countries or LDCs. This is called the “regional exception” and was put in place to allow for the creation of economies of scale. Unfortunately, the “regional exception” is only relevant for Regional Economic Regions in Africa because economic regions elsewhere do not have a majority of LDCs members. For details on how this system works see the report Procurement of Patented Medicines by SADC Member States. This document describes scenarios of the use of TRIPS article 31bis for the Southern African Development Community (SADC). These scenarios can be applied to any REC with a majority of LDC members.

TRIPS 31bis (3) reads:With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products: where a developing or least developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article 31(f) shall not apply to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question.

The following scenarios are therefore possible:

There is capacity to produce the generic medicine in the REC. A compulsory licence or public non-commercial use (‘government use’) licence can be issued to produce for regional purposes without export quantity limitation in the region, based on the regional exception of article TRIPS 31bis, to supply to all the countries in the REC.

There is no capacity to produce the generic medicine in the REC, but the generic is available from affordable generic source(s) outside the REC. Importation into the REC and re-exportation to other REC countries is possible. An ordinary compulsory or government use license may be required to import in some countries of the REC which have granted patents claiming the medicine.

The generic medicine cannot be produced in the REC, nor seem to be available from affordable generic source(s) outside the REC. Use of compulsory or government use license based on TRIPS article 31bis is required to import and re-export within SADC is possible using TRIPS “regional exception”.

For a flow chart detailing how each of these scenarios might be arrived at within an REC, see the image below or download a PDF version here.

Other ML&P tools

Flow chart

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